Someone Pls explain this given sentence in img in a simple words with any eg.
and also if anyone can relationship between callable convertible bond and volatility.
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OAS refers to the spread required for credit and liquidity risk, so if the OAS is high, the r used to discount the cash flows of the bond is high, and so the price is low.
The call option is enjoyed by the issuer so the investor would prefer the option to lapse, and so would prefer if the cost (or value) of the option is low. Think: interest rates don’t fall too much.
Hope this helps!